The monetary approach makes the general prediction that A) the exchange rate, which is the relative price of American and European money, is fully determined in the long run by the relative supplies of those monies. B) the exchange rate, which is the relative price of American and European money, is fully determined in the […]
Refer to above figure. Given the opportunity to sell at world prices, the marginal (opportunity) cost of selling a ton domestically is what? What will be an ideal response? ANSWER $5/ton.
Historically those few developing countries which have succeeded in significantly raising their per-capita income levels A) did not accomplish this with import-substituting industrialization. B) did accomplish this with import-substituting industrialization. C) tended to provide heavy protection to domestic industrial sectors. D) favored industrial to agricultural or service sectors. E) did so to the detriment of […]
Which of the following institutions is the most important participant in foreign currency markets? A) A retail customer B) A commercial bank C) A foreign exchange broker D) A central bank E) None of the above. ANSWER B
Which one of the following statements is the most correct? A) If central banks are not sterilizing and the home country has a balance of payments surplus, any associated increase in the home central bank’s foreign asset implies an increased home money supply. B) If central banks are not sterilizing and the home country has […]
Refer to the above table. Suppose the U.S. government (but not Europe) offers a $10 million subsidy? What will be an ideal response? ANSWER In this case Airbus would decide not to enter the market since it knows Boeing will, and that therefore its own production will entail a loss of $5 million.
The concept of “economic pessimism” stems from A) the theory and empirical fact which states that developing nations face declining export prices relative to increasing import prices. B) the fact that economic growth in an era of globalization is difficult to attain. C) the fact that smaller countries would not enjoy comparative advantage unless they […]
The LM curve will shift to the right when government expenditures increase. Indicate whether the statement is true or false ANSWER FALSE
A foreign exchange swap A) is a spot sale of a currency. B) is a forward repurchase of the currency. C) is a spot sale of a currency combined with a forward repurchase of the currency. D) is a spot sale of a currency combined with a forward sale of the currency. E) make up […]
Refer to above figure. While selling exports it would also maximize its domestic sales by equating its marginal (opportunity) cost to its marginal revenue of $5. How much steel would the firm sell domestically, and at what price? What will be an ideal response? ANSWER 4 million tons at $10/ton.
